Arnold Quiz: International Economic Development

Quiz
International Economic Development

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1. Economists define a developed country (DC) as a country in which: a. people enjoy a high life expectancy at birth.
b. the adult literacy rate exceeds 90%.
c. the total or per capita real GDP is relatively high.
d. the per capita real GDP growth rate is relatively high.
e. the combined (primary, secondary, and tertiary) educational enrolment ratio exceeds 70%.

2. Economists define a less developed country (LDC) as a country in which: a. the infant mortality rate exceeds 10%.
b. the percentage of the population with access to safe water is less than 50.
c. the percentage of underweight children under age 5 exceeds 50.
d. the total or per capita real GDP is relatively low.
e. the female life expectancy at birth is smaller than the male life expectancy at birth.

3. There is a considerable disparity between the poorest of the poor countries and the richest of the rich countries. In the mid-1990s, for example, the 10 poorest countries had an average per capita GDP of about: a.      $90.
b.    $160.
c.    $500.
d. $1,200.
e. $1,678.

4. There is a considerable disparity between the poorest of the poor countries and the richest of the rich countries. In the mid-1990s, for example, the 10 richest countries had an average per capita GDP of about: a. $12,000.
b. $16,000.
c. $20,000.
d. $23,788.
e. $29,500.

5. Which of the following statistics from the mid-1990s are not credible?: a. Life expectancy in the least developed countries was 50.4 years, but equaled 74.1 ears in the industrial world.
b. The adult literacy rate in the least developed countries was 48.1%, but equaled 98.5% in the industrial world.
c. The combined (primary, secondary, and tertiary) educational enrolment ratio was 36% in the least developed countries, but equaled 83% in the industrial world.
d. The percentage of births attended by trained health personnel was 75 in the least developed countries, but equaled 99 in the industrial world.
e. The number of radios per 1,000 people was 96 in the least developed countries, but it equaled 1,018 in the industrial world.

6. Which of the following statements about the role of natural resources in economic development is correct?: a. An abundant supply of natural resources is an indispensable prerequisite for achieving a high level of economic development.
b. An abundant supply of natural resources is, by itself, a sufficient basis for achieving a high level of economic development.
c. Both (a) and (b) are correct.
d. Plentiful natural resources are neither a sufficient nor a necessary factor for achieving a high level of economic development.
e. Countries poor in natural resources may prosper, while countries rich in natural resources may not; thus, it seems, finding more natural resources in a country will, ceteris paribus, not help its economic development.

7. Which of the following statements about the role of capital resources in economic development is correct?: a. There is a predictable relationship between capital formation and labor productivity: Physical capital, such as a tractor or machine, increases an individual's ability to produce.
b. There is a predictable relationship between capital formation and labor productivity: Human capital, such as health, knowledge, and skills, increases an individual's ability to produce.
c. To produce capital, be it physical or human, present consumption must be forgone.
d. Saving, which is nonconsumption, is a prerequisite for capital formation, at least in a fully employed economy.
e. All of the above statements are correct.

8. Which of the following is a correct statement about labor productivity?: a. Labor productivity is relatively high in developed countries and relatively low in less developed countries.
b. Labor productivity equals the portion of the real GDP that is attributable to the use of labor (rather than the use of capital or natural resources).
c. Labor productivity can be computed as GDP divided by the quantity of physical capital used (which makes workers so productive).
d. Labor productivity can be computed as GDP divided by the quantity of human capital used (which makes workers so productive).
e. Labor productivity can be computed as GDP divided by the quantity of physical plus human capital used (which makes workers so productive).

9. Which of the following is a correct statement about advanced technology?: a. The high per capita GDP of the developed countries, relative to that of the less developed countries, can be traced, in part, to the availability and use of advanced technology.
b. A less developed country may forgo the use of advanced technology because its labor force may lack education and education is costly to obtain.
c. A less developed country may forgo the use of advanced technology even if its labor force is sufficiently educated because technology itself is costly to obtain.
d. A less developed country may forgo the use of advanced technology even if its labor force is sufficiently educated, and the technology is affordable, if the use of other (for example, labor-intensive) production methods is cheaper.
e. All of the above statements are correct.

10. Which of the following is a correct statement about the property rights structure?: a. It plays a crucial role in explaining why some countries are rich and others poor.
b. The term refers to the whole range of laws, rules, and regulations that define rights for the use and transfer of scarce resources.
c. Rapid increases in per capita real GDP are encouraged by a system of property rights that rewards people for directing their resources to effective economic projects.
d. Individuals will invest more, take more risks, and work harder when the property rights structure allows them to keep more of the fruits of their investing, risk taking, and labor.
e. All of the above statements are correct.

11. Which of the following is a correct statement about foreign aid?: a. Foreign aid is any capital inflow or other assistance given to a country that would generally not have been provided by natural market forces.
b. Foreign aid consists exclusively of long-term loans that are usually repayable over a period of 10 to 20 years.
c. Recipient countries benefit because of (a), which is less burdensome to them than short-term or medium-term loans would be.
d. All of the above statements are correct.
e. None of the above statements is correct.

12. Which of the following is a correct statement about foreign aid?: a. Foreign aid can consist of long-term loans that are usually repayable over a period of 10 to 20 years.
b. Foreign aid can consist of soft loans that are paid back over very long periods (some up to 99 years) and at low interest rates.
c. Foreign aid can consist of the sale of surplus products to a country in exchange for the recipient's currency (rather than hard-to-get dollars, gold, and such).
d. Foreign aid can consist of technical assistance.
e. All of the above statements are correct.

13. Which of the following is a correct statement about foreign aid?: a. Critics point out that it is often given for reasons that have nothing to do with economic development, military assistance being a prime example.
b. Critics point out that donor countries unfairly give more aid per person to the poorer LDCs than to the richer LDCs.
c. Critics point out that foreign aid is often little more than an export subsidy to firms in the recipient countries.
d. Critics point out that foreign medical aid typically helps the poorest of the poor in the recipient countries, while neglecting (equally needy) middle classes.
e. All of the above statements are correct.

14. Which of the following is a correct statement about foreign aid?: a. Critics point out that funds given for education typically go to university education, while primary and secondary education is needed much more.
b. Critics point out that many countries receiving aid do not achieve increases in their per capita GDPs.
c. Critics point out that donors cannot realistically hope to specify what the aid must be used for because money is fungible.
d. All of the above statements are correct.
e. None of the above statements is correct.

15. Consider two countries with equal per capita real GDPs. If country A's per capita real GDP grows at 2% per year, while country B's per capita real GDP grows at 4% per year,: a. country A's per capita real GDP after 5 years will equal only about 80% of country B's per capita real GDP.
b. country A's per capita real GDP after 10 years will equal only about 60% of country B's per capita real GDP.
c. country A's per capita real GDP will double in roughly 36 years.
d. country B's per capita real GDP will double in roughly 13 years.
e. all of the above will occur.

16. Which of the following statements about population growth is correct?: a. Population growth tends to be higher in less developed than in developed countries.
b. If country A has 30 births per 1,000 and 20 deaths per 1,000, its population growth rate is 10%.
c. Both (a) and (b).
d. Because people cannot afford as many children and because of the high infant mortality, birth rates tend to be lower in less developed than in developed countries.
e. Largely because of (d), the dependency ratio in many less developed countries is unusually low.

17. Which of the following statements correctly characterizes the dependency ratio?: a. It equals the number of children under a certain age (e.g., 18 and under) divided by the total population.
b. It equals the number of elderly persons (e.g., 65 and over) divided by the total population.
c. It equals the number of children under a certain age plus the number of elderly persons, all divided by the total population.
d. In countries where pensions, Social Security, and the like do not exist and the economy revolves around agriculture, the dependency ratio is likely to be low.
e. It is a synonym for the vicious circle of poverty: labor productivity depends on investment, investment depends on saving, saving depends on income, income depends on labor productivity, and all of them are low.

18. A list of major obstacles to economic development includes:: a. low population growth, as a result of high death rates.
b. low savings rates, as a result of low incomes.
c. low marginal tax rates.
d. all of the above.
e. none of the above.

19. Which of the following is unlikely to be an obstacle to economic development?: a. Low savings rates.
b. Low marginal tax rates.
c. Political instability.
d. The threat of government expropriation of private property.
e. Cultural factors that cause people to view change as dangerous.

20. Alvin Rabushka studied the tax structures of 54 LDCs between 1960 and 1982 in order to assess the impact of marginal tax rates on the course of economic development. His findings include all of the following, except:: a. The change in a person's tax payment divided by the change in the person's taxable income (which defines the marginal tax rate) does affect economic development.
b. Hong Kong, with the highest marginal tax rate, had the lowest growth rate per capita.
c. Low-tax countries overall had an average per-capita income growth rate of 3.7% per year.
d. High-tax countries overall had an average per-capita income growth rate of 0.7% per year.
e. LDCs with top marginal tax rates of 50% or lower had higher average per-capita income growth rates than those with top marginal tax rates of 50% or more.